How Are Property Taxes Calculated in California?

Written by Mallory Malesky; Updated December 15, 2018

Every homeowner nationwide is expected to pay property taxes, but what that means, exactly, varies state to state. In California, property taxes are assessed on real estate and also on personal property, such as a boat. The tax calculations in California are regulated on the state level and collected by the local county.

Tip

California property taxes get calculated by multiplying the property's assessed value by the current tax rate.

Calculating Property Taxes

California's Proposition 13, passed in 1978, defines how property taxes are calculated and reassessed. Property taxes are calculated by multiplying the property's tax assessed value by the tax rate. The standard tax rate in the state is set at 1 percent, per the proposition. Therefore, residents pay 1 percent of their property's value for real property taxes. The base year value is set when you initially purchase the property, based on the sales price listed on the deed.

Reassessments for Improvements

Proposition 13 also states that the property's assessed value cannot increase more than 2 percent each year. At the beginning of each year, the county board of assessors completes reassessments on each property. Typically, the value will increase by the allowed 2 percent. Then you will be taxed on 1 percent of the new value. However, if you made improvements or completed renovations on the property, the assessor will factor this into the new value as well. There can be different tax values for one year, depending on when the construction was completed. For example, if the improvement was completed with three months left in the year, the first nine months will be taxed at 1 percent of the original value and the last three months will be taxed at 1 percent of the value including improvements.

Assessing Special Taxes

In addition to the base property taxes, additional taxes are permitted to be imposed to fund special initiatives. The nature of the initiatives varies, depending on the location. Local cities, towns or counties can impose these additional taxes; however, the tax must be approved by the residents through a vote. Mello-Roos taxes are an example of a special tax. Enacted in 1982, Mello-Roos allows for districts to purchase bonds to fund their public initiatives and then assess a tax for approximately 10 to 20 years to repay the bond.

Personal Property Taxes

Personal property taxes, or unsecured taxes, are also imposed on California residents who own certain luxury items or items for a business. Generally, luxury items include boats, airplanes or recreational vehicles owned for personal use. Business items include equipment, furniture, electronics and computers, among others. However, inventory in storage for sale does not fall under the taxable business property. The tax rules under Proposition 13 don't apply to personal property. The assessments are regulated at the county level, with the tax amount varying from year to year. Failure to pay the personal property taxes can result in penalties or a lien being placed on the property's title.